Updated: February 3, 2021 8:27:46 pm
The 15th Finance Commission has recommended a grant of Rs 8,000 crore to incubate eight new cities, according to the Ministry of Housing and Urban Affairs (MoHUA).
“To my knowledge, the Finance Commission has never given a grant like this before,” MoHUA Secretary Durga Shanker Mishra said on Tuesday.
Stating that the ministry will soon come out with the framework, Mishra said, “The Finance Commission has given us a new window and new thinking. Earlier we had stopped thinking about new cities. (But) the way the nation is growing, unless we have planned cities, it will all be outgrowth cities. And outgrowth is an inefficient use of the city.”
He said the 2011 Census had categorised 31.2 per cent of India as urban, but only 26 per cent of that as statutory towns. This gap of 5 per cent of urbanised India – populated by roughly 6 crore people – is living in either census towns or in outgrowth towns.
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Census towns are towns of over 5,000 people, with a density of more than 400 per sq km, and more than 75 per cent of non-farm, male labourers. These towns are still under the panchayat systems, and not municipalities. Outgrowth towns are in the periphery of big cities, also governed by panchayats.
While Mishra said he would like to combat this by creating new cities, he did not specify whether these would be new, greenfield cities or in areas where urbanisation has already begun.
Increased overall funding for ULBs
For cities with more than a million people, roughly Rs 38,000 crore will be distributed based on performance of improvements in air quality, drinking water, sanitation, and solid waste management. For cities with less than 1 million people, roughly Rs 83,000 crore will be distributed in a similar manner.
The Finance Commission has also allotted Rs 450 crore to a “shared municipal services” fund where the ministry will help smaller urban bodies with their back-end work such as database maintenance. The ministry made 86 clusters of the smallest urban local bodies (ULBs) which they can help service from afar.
Mishra said: “When we gave our presentation to the Finance Commission, we also introduced a new thing. We are very happy the Finance Commission has listened to our recommendation that the smaller local bodies that have no capacity, manpower, expertise need help in collecting property tax, accounting the taxes, etc.”
The Commission’s overall funds for ULB saw a 78 per cent increase over last year – from Rs 87,000 crore to Rs 1.6 lakh crore. Of this, a little over Rs 1.2 lakh crore has been allocated directly to ULBs.
Cities will receive funding only when their annual accounts are put in public domain. Also, if a state’s GDP increases, then the city’s property tax should increase by a similar proportion, Mishra said. “Even as a state’s GDP is increasing, the urban local bodies are becoming that much weaker. So this condition has been added,” he said.
In the budget for MoHUA, the Pradhan Mantri Awas Yojna (PMAY), to provide housing for all, was allocated Rs 8,000 crore in 2020-21, but spent Rs 21,000 crore. Continuing the same trend, the allocation in this year’s Budget is Rs 8,000 crore, leading industry experts to deduce that the mission will again have to resort to extra-budgetary resources to finance the bulk of the mission.
In her Budget speech, Finance Minister Nirmala Sitharaman had announced a new bus scheme and emphasis on MetroLite and MetroNeo systems in cities. Mishra said the bus augmentation will focus on cities with population of over 5 lakh and the state capitals. With a focus on Metros in Tier-II cities such as Gorakhpur, Jammu, Srinagar, Bhiwadi, and Darihera, the goal is to extend India’s Metro lines to 1,000 km, from a current estimate of 700 km, he said.
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